HEALTH SAVINGS ACCOUNTS OFFER SOME RELIEF

October 26, 2004

While Health Savings Accounts (HSAs) are no cure-all for the crisis in health care, they could make consumers more cost-conscious and reduce premiums, making insurance more affordable for the 45 million people who lack coverage, says USA Today.

Here's how they work:

Individuals and employers can purchase lower-cost policies with high deductibles -- at least $1,000 for an individual and $2,000 for families.

Those deductible expenses are paid out of HSAs; unlike the "use it or lose it" rules of current flexible spending plans, whatever isn't spent collects interest from year to year.

Early results of HSAs, which became available only this year, are encouraging:

One-third of HSA buyers were previously uninsured, according to eHealthInsurance, an online brokerage.

Nearly half earn less than $50,000 a year, and 70 percent paid less than $100 a month for coverage because high-deductible policies are 15 percent to 40 percent less expensive than comprehensive policies.

New HSA purchasers typically are over 40, and many have chronic health issues, reports Assurant Health; in most plans, preventive care is paid by the insurer, and generic drug usage is consistently higher than with traditional plans.

HSAs could ease the two biggest problems in health care: soaring costs and growing ranks of uninsured. Businesses have been slow to offer HSAs because the government issued guidelines only in June.

Few other innovative options are available to tackle the nation's health care woes. HSAs are no panacea, but if they offer some relief, they're an experiment worth following, says USA Today.